Reforms in the green energy sector should be prioritised at the start of the next Parliament, former MPs from GERB, ITN and DB unanimously agreed during the regional conference for corporate procurement of renewable energy – RE-Source Southeast, held last week in Sofia.
Removal of administrative barriers and predictable regulatory framework for access to the grid. These and other proposals of the industry organizations will be considered immediately after the elections by the Energy Committee in the new National Assembly.
Romania will build more than 7,000 MW of solar and wind power plants by the end of the decade, and Greece has more than 30,000 MW in the pipeline. Bulgaria also needs a more ambitious plan and could increase its target from 2,000 MW to at least 10,000 MW, according to Delyan Dobrev (GERB). Requests for grid connection of 8500 MW new capacity have been received only in the past year, said the director of ESO Angelin Tsachev.
The construction solar power plants for self consumption is one of the measures the industry has taken to reduce electricity costs, both Rumen Radev (AIKB) and Ivaylo Naidenov (BFIEK) confirmed when presenting. Examples with specific factory power plants and ambitious plans for new projects were presented by Kiril Domuschiev (CEIBG) and Tim Kurt (Aurubis).
According to a recent study, Bulgaria could attract more than 6 billion euros in green energy by 2030 if it offers a predictable investment environment. The sector can develop without subsidies, as long as market liberalization continues.
Bulgaria’s first long-term corporate contract for the purchase of energy from a new RES plant is expected to be announced by the end of 2021. This type of contracts will give a new impetus to investment in green energy because they offer security to investors and financial institutions.
APSTE’s ground-breaking study of market perspectives for energy storage technologies in Bulgaria was presented in the closing panel. The association estimates that at least 7 GW of new renewable energy capacity can be built in Bulgaria by 2030, together with 1.7 GW of energy storage systems, which would help create tens of thousands of new jobs.
In detail
The RE-Source Southeast regional conference was held on September 14, with over 150 participants and 30 speakers. It was organized by RE-Source Hub Bulgaria – the Association for Production, Storage and Trade in Electricity (APSTE) and the Bulgarian Wind Energy Association (BGWEA), under the auspices of RE-Source Platform, the leading European forum for corporate renewable energy supply.
“Renewable energy is the most affordable way for businesses to protect themselves from high prices of electricity on the spot market. We are pleased to be bringing together industrial consumers, green electricity producers and electricity traders. We are building a regional platform for exchange of experience, business networking and negotionating of corporate deals, “said Nikola Gazdov, Chairman of APSTE.
“The first event for corporate supply of renewable energy in Southeast Europe is held just in time within the context of the immediate dynamics of the electricity market and the need for decarbonisation,” said the chairperson of BGWEA, Miglena Stoilova.
Policies and regulations
The opening panel discussion focused on the political strategies for the development of the RES sector and the overall economy decarbonization in Bulgaria.
It was attended by the Deputy Minister of Energy Miroslav Damyanov, as well as MPs from the Energy Committee in the 46th National Assembly – Ivan Hinovski (ITN), Delyan Dobrev (GERB) and Vladislav Panev (DB). The panelists agreed that the new green power projects do not need subsidies because they can supply electricity at prices well below current market prices.
“High spot market prices in recent months have actually increased the pressure on coal-fired power plants and present us with an additional incentive to build new RES power plants,” said Delyan Dobrev.
Vladislav Panev expressed a similar opinion, pointing out that “Coal power plants are not competitive even at the current high prices and businesses are looking to invest in new RES projects for self-consumption”. According to Ivan Hinovski, “The development of renewable energy should go hand in hand with the construction of a new unit at the Kozloduy NPP and new gas capacity to ensure the security of the system.”
The deputies pledged to work to reduce the administrative burden on new renewable energy plants. They called on the RES associations and employers’ organizations to prepare proposals for simplifying and streamlining regulatory procedures and submit them for discussion to the Energy Committee of the next National Assembly.
Dobrev raised the issue of increasing the ambitions for green power generation in Bulgaria: “Currently, Bulgaria’s national goal is to build 2,000 MW of new renewable energy capacity against 30,000 MW in neighboring Greece. Why don’t we set a more ambitious goal of at least 10 GW of RES by 2030? ”
The panelists agreed that investments in the transmission and distribution networks are a crucial element of the economy decarbonisation. According to Dobrev, “as much money as possible from the National recovery and resilience plan should be invested in the development of the network.” Vladislav Panev added: “It is certain that in the next decade there will be billions for the network. These funds must be invested transparently so as not to fall into corruption schemes.
Grid capacity and regional market integration
Angelin Tsachev, executive director of the Bulgarian transmission system operator ESO, also stressed the need to develop the electricity transmission system. “We are witnessing huge interest in investing in renewable energy. In the past year alone, ESO has received grid connection inquirues for 8.5 GW of new projects. Of these, nearly 500 MW were received from the electricity distribution system operators, “Tsachev said. “For example, there are inquiries for solar power plants with a capacity of 600 MW in the area of Svilengrad and Lyubimets in the south of Bulgaria alone, but the lack of grid capacity there is an obstacle to their realisation,” added the director of the system operator.
Tsachev also announced that ESO has launched a new service to advise investors on technical and administrative procedures. The new service will help simplify the process of reviewing and coordinating the project documentation and will speed up the development of new renewable energy projects in the country“, he added.
ESO has also prepared a proposal for legal changes to ease the procedure for reserving grid capacity, against payment of a guarantee by investors. Tsachev also stressed the benefits of introducing energy storage technologies to accompany the construction of new REA projects and improve the management of the electricity system.
The regional integration of the electricity markets of Bulgaria, Greece and Romania for the Day Ahead market is progressing and is expected to be completed by the end of the year, confirmed Zoltan Nagy-Bege, Deputy Chairman of the Romanian energy regulator ANRE and Angelin Tsachev from ESO.
“We need to replace polluting and expensive plants. Most of the new capacity will be from renewable sources, “said the Romanian representative. He outlined the reforms Romania has implemented in the last year – allocating funds for investments in the electricity grid, simplified procedures for the development of renewable energy projects and access to the grid, as well as the possibility of trading outside the organized market. The effect of these reforms is the conclusion of the first long-term contract for the supply of green energy directly between the producer and the consumer in early September.
“We expect about 7,000 MW of new renewable capacity to be built in Romania by 2030,” said Ciprian Glodeanu, president of the local photovoltaic association
The industry invests in RES
Another key focus of the conference was the discussion panel with the participation of employers’ organizations and the energy-intensive industry.
Ivaylo Naydenov, Executive Director of Bulgarian Federation of Industrial Energy Consumers (BFIEC) informed that the industry is currently suffering huge losses. “The energy component represents between 30% and 70% of production costs in the industry. Unprecedentedly high electricity prices lead to a direct loss of competitiveness,” Naidenov said.
According to him, any opportunity to reduce price pressure is welcome and RES systems for self-consumption are one of the interesting opportunities for the business. Rumen Radev, Deputy Chairman of Bulgarian Industrial Capital Association (BICA), supported this observation.
“In the last two years, we are seeing increased interest from businesses in Bulgaria to build solar power plants for self-consumption in order to reduce their electricity bills,” confirmed the technical director of Renergy, Dimitar Tsekov. “Our team works on similar projects with large industrial consumers – cement plants, pharmaceutical companies, chemical plants and others. This gives us confidence that the development of the RES sector is already entirely driven by market processes, “added Tsekov.
“The trend of industrial enterprises willing to build solar power systems to cover their own consumption is obvious,” Radev said. According to him, such projects are profitable, but on-site production can generally cover less than 20% of consumption.
Tim Kurt, CEO of Aurubis Bulgaria gave an example with the solar power plant that the company is building in Pirdop. “We are building the largest photovoltaic plant in Bulgaria for our own consumption, with a capacity of 10 MW. It will help cover 2.5% of the annual electricity consumption of our plant in Pirdop, “said Kurt. He added that Aurubis plans to build a second solar power plant, while continuing to invest in energy efficiency measures.
“The industry should be concerned with production, not the construction of power plants. But circumstances force us to invest in photovoltaics instead of machines and equipment for our main production. This was stated by Kiril Domuschiev, chairman of KRIB – Confederation of Employers and Industrialists in Bulgaria, the largest employer organisation in the country. He gave the example of Huvepharma, which he heads. The pharmaceutical company has already built 3 MW of solar power near its industrial site in Peshtera and is working on a new 20 MW project for self-consumption in Razgrad.
Kiril Domuschiev said he was convinced that the industrial companies will continue to invest in RES power plants for self-consumption, including in installations that are not near the production sites.
The executive director of Solarpro, Lyubomir Evstatiev, pointed out to an alternative model in which “Companies do not make capital expenditures for the construction of the plant, which they will use for their own consumption, but sign a lease agreement with the project company.” This frees them from the need to invest in an uncharacteristic field and helps them focus on their core business.
Investments in new RES power plants: Electricity traders and long-term supply contracts
The panelists agreed that energy traders could play an important role in decarbonising the industry. According to Radev and Kurt, market volatility can be hedged by concluding long-term supply contracts. Radev clarified that at the moment the products with a term of up to 1 year are considered long-term in Bulgaria. He added that a number of companies are negotiating with RES producers and traders of electricity for longer-term contracts, but results are still expected. Tim Kurt shared Aurubis’ experience in concluding long-term contracts with conventional plants in Germany, adding that the benefits of concluding such contracts with renewable energy producers are still being analyzed.
Electricity traders are also seeing a huge increase in demand for green energy. Most of the electricity contracts in Bulgaria are short-term – from 6 months to 1 year and very rarely a 2-year contract, the experts stressed. Martin Georgiev, Chairman of the Association of traders with electricity in Bulgaria (ATEB), said “Bulgaria’s electricity market has low liquidity, which is one of the reasons consumers prefer short-term products.” Synergon’s manager, Dimitar Bartov, added: “Electricity traders need to build a balanced portfolio that includes renewable energy producers. In the case of long-term contracts, the price of guarantees would be too high due to the volatility of electricity prices, which is the reason why contracts for 1-2 years are currently being signed”.
This is expected to change in the coming months, according to Andrey Rekalov, manager of the electricity trader TOKI. “I assume that by the end of the year we will witness the first corporate agreement between a producer and a trader of electricity,” Rekalov said.
A similar opinion was expressed by Severin Vertigov, director of the investment company Enery. “I expect the first corporate PPA to be announced in the next six months. The regional integration of the electricity market will accelerate this process, “Vertigov said.
According to market participants, the debut corporate energy purchase agreement (PPA) will be a huge boost for the renewable sector. “Long-term corporate purchase agreements will be an important tool for attracting investors and securing financing for new renewable energy plants,” said Tanya Karageorgieva from UnitCredit Bulbank.
“As there are no renewable support schemes in Bulgaria, corporate contracts will ensure that it can rely on predictable cash flow,” Karageorgieva added.
“Bulgaria can attract over 6 billion euros in investments in green energy by 2030,” said Dimitar Enchev, co-founder and director of CWP Global. According to a market analysis commissioned by the company, 3.9 GW of solar energy, 3.4 GW of wind energy and 1.2 GW of rechargeable batteries can be installed by the end of the decade. According to Enchev, if this is achieved, the average price of electricity in Bulgaria will be 30% lower in 2030, compared to maintaining the current mix, exports will double and the carbon intensity of our economy will fall over five times.
Market perspectives for energy storage in Bulgaria
In the closing panel was presented the report “Energy storage – Market prospects for Bulgaria” – a specialized study by APSTE on technologies and market potential for energy storage systems in Bulgaria. In case of active policies to promote the sector, the association estimates that at least 7 GW of new renewable energy capacity can be built by 2030, together with 1.7 GW of energy storage systems, which would help create tens of thousands of new jobs. Participants presented the latest technological innovations and commercial solutions for combining renewable energy production with energy storage systems.
The increase in the share of renewable energy sources in the energy mix inevitably leads to the need for a wider penetration of energy storage systems, summed up Maria Merdjanova from the leading manufacturer of photovoltaic modules Jinko Solar.
The full report “Energy storage: Market perspectives for Bulgaria” can be downloaded from APSTE’s website here. An executive summary is also available here.
